Raw Material Procurement on Agroindustrial Supply Chain Management: A Case Survey of Fruit Processing Industries in Indonesia

Abstract

In sub-system of Indonesian agribusiness, fruit processing industries are major component of agroindustrial activities. In term of economic development, these fruit processing industries contribute significant amount to employment and income generation. The objective of this research was to evaluate present condition of procurement system as a part of supply chain management in fruit processing industries. Based on a purposive sample survey in in East Java province, Indonesia, this research paper illustrated raw material procurement factors and problems encountered in these fruit processing industries. The data used for analysis was obtained through a survey conducted in the study area. Direct visit to 63 the fruit processing industries and discussion with key persons were implemented to reach deep information. Most fruit processing industries used more than one raw material supplier to reach more alternatives and more guarantees to procure large quantity of raw material. Most of big industries used contract system in raw material procurement to reduce risk because of large amount of raw material requirement for large number of production. Continuity and resource of raw material were identified as very strong and strong factors in raw material procurement of fruit processing industries.